Social Security may appear to be a very simple, constantly-evolving benefits program, but in fact, changes are made at least once a year and sometimes even more frequently. The yearly cost-of-living adjustment, which is announced each October & takes effect the following January, is arguably the most noticeable of these modifications.
Due to low CPI rates, the inflation adjustment in recent years has been fairly small. However, inflation soared in 2021 and 2022, causing the COLA 2022 to experience its largest increase in 30 years. Due to the Social Security Administration’s recent announcement of the new COLA adjustment taking effect in January, this pattern will continue in 2023.
Exceptionally Large Cost of Living Adjustment
On October 13, 2022, the momentous announcement that Social Security recipients had been waiting to hear was made. The enormous 8.7% cost-of-living increase that will take effect in Jan 2023 is scheduled. One of the greatest COLAs ever recorded, this one is the biggest since 1981’s 11.2%, which occurred in the middle of a 1980 CPI rate of 13.5%.
The CPI has been declining for three months in a row since June 2022, when it reached a high of 9.1%. It is possible that by the time Social Security beneficiaries receive their first enhanced checks in January 2023, the CPI will be significantly lower than the 8.7% increase in their benefits, which will last throughout 2023, even though rates are still high as a result of the Fed’s rate hikes.
Increased Social Security Benefit Maximum
The increase in the maximum Social Security income is another significant modification that the Social Security Administration declares each year. This is mostly related to the expansion of the taxable wage base because it seems to reason that the more money you pay in taxes, the greater your possible max benefits should be.
Your maximum benefit for 2023 will increase to $4,559 from $4,194 if you await to file for benefits until you are 70 years old. Even though this is a significant increase, it’s also critical to understand how unlikely it is for any worker to receive the full maximum benefit. You would need to wait until age 70 to apply for benefits, as well as work for 35 years and earn the entire Social Security pay base amount or more. Otherwise, the likelihood is that your payment will be closer to the overall Social Security benefit, which was $1,657 in 2022 and is anticipated to be about $1,801 in 2023 reports Yahoo.
